L'Oreal is a well-known firm for its strategy focused on organic growth. The group has concentrated its efforts for a long while on the development of its own brands by undertaking a few targeted acquisitions. To acquire new competences, a large confidence is granted to the R&D centres present in France, in the US, in Japan and in China. Its "technology acquisitions" are almost entirely implemented in these centres. Alliances with other firms are also very rare. We will analyze the one with Nestle on Galderma.
Research became the base of the system of L'oreal as soon as the foundation of the firm was established. The scientific principles of Schueller and the devotion to the needs of the consumers have remained very strong. This spirit has maintained scientific training over the years by mainly two of the four CEOs of the company, that is to say, Francois Dalle from 1975 till 1984 and Charles Zviak from 1984 till 1988. Impulsion was therefore given historically in the highest level of the society. Even if it was certainly less with Owen-Jones whose strategy was largely focused on marketing, the latter maintained and even developed the R&D efforts of the company.
[...] Galderma is specialized in the treatment of the cutaneous diseases, of the hair, skin and the nails (acne, eczema, mycosis, rosacea, alopecia), and invested of its turnover in 2007 in Research and Development in its laboratories of Sophia-Antiopolis, Princeton and in Japan. These investments in R&D are one of the keys for the growth of Galderma. These R&D centers insure the discovery and the development of new therapeutic solutions. Galderma today ranks 5th in the world of the dermatological firms, and also had an annual turnover of 735 million euros in 2007. [...]
[...] Grollier, the former L'Oreal boss of Research, compares this structure with a rocket in 3 aspects: "to send an object into orbit, we need three engines: advanced research, applied research and the development which assures the push” Advanced research: A quarter of the workforce of the researchers and one third of the research budget is attributed to progress in knowledge in all the domains which concern the group - the skin, the hair, the nail to synthesize new molecules, and to invent new methods of toxicological investigation as well as techniques to measure the efficiencies of new active principles. [...]
[...] In 2000, the opening of the “L'Oreal Institute for Ethnic Hair and Skin Research”, in Chicago, devoted to the study of African skin care, was a major event which again illustrated the group's strategy to point out research for the consumers' expectations. The importance given to research leads this multinational and its 3,095 researchers to propose products which are always more varied and to get interested in more numerous markets and activities. However, it is important to underline the additional and determining role played by marketing. [...]
[...] Innovation: The mainspring of the L'Oreal Group's development: Cosmetological and dermatological research is one of the key success factors of L'Oreal. The performance and the quality of L'Oreal products are based on innovation and the development of the group. The philosophy of the group can be illustrated by Jean Francois Grollier's sentence, Vice- president of the group in charge of “Future belongs to the powerful, modern structures, which will know how to face the multiple technological, scientific, ecological challenges of the next coming years. [...]
[...] L'Oreal spends a very large budget for R&D ( of its turnover) to acquire advanced knowledge particularly in the field of cosmetology, as evidenced by the advanced research laboratories. The group thus manages to be a step ahead of its competitors. However, this method was copied by other cosmetic companies, including Shiseido, which is becoming a formidable competitor for the group. Furthermore, a developed system allows L'Oreal to be aware of new markets and trends and as a consequence to be a particularly dynamic firm which manages to follow the discoveries of its competitors, to avoid lagging behind. [...]
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